Former pensions minister Steve Webb answered readers’ questions in a live web chat today. He was joined by Michelle Cracknell, boss of The Pensions Advisory Service, and experts from her team. Read all their replies here.

Steve Webb and Michelle Cracknell are joining us for a 'Webbchat' on pensions later today

Lee Boyce

Host commentator

Kaya Marchant

Host commentator

Jaspal Rehal

Host commentator

Steve Webb

Host commentator

Michelle Cracknell

Host commentator

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16:03

Thank you!

A big thank you to all of the This is Money readers who have submitted questions this afternoon.

I'm sorry that we haven't been able to answer all of them but we have been typing away furiously for the past couple of hours and have been able to answer more than forty questions!

I am particularly grateful to my friends at the Pensions Advisory Service (TPAS) who have been sitting alongside me this afternoon.

If you still have questions, please feel free to email them in to pensionquestions@thisismoney.co.uk and I may be able to pick them up as part of my weekly column or you can visit the TPAS website here.

Thank you for your interest and to our colleagues at This is Money for hosting the event.

Best wishes,

Steve Webb (Director of Policy, Royal London)

15:58

Are financial advice charges a rip-off?

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How can pensions advisers charge for eg 1 one per cent for pensions advice per year.

This will amount to £4000 pounds for my pot surely this is exorbitant and the government should investigate excessive charges.

These advisors must be making ridiculous amounts of money for what to me is un-guaranteed results.

Lets face it they will ask you for levels of risks and then put you in a 60 – 40 bonds equities split pension anyway.

Steve replies:

When it comes to paying for financial advice it is absolutely right to ask what you are getting for your money.

But in some cases the cost of advice will be paid back many times over in improved outcomes depending on the complexity of your situation.

If you are not happy with the cost of the advice you are receiving you can, of course, shop around and you might want to find an adviser who will charge on a fixed fee basis rather than as a percentage of the value of your pot.

It is worth saying that a good financial adviser will be doing more than simply looking at your pension pot and how it is invested.

They will want to look at the situation of your whole household and also to look at things like inheritance tax planning, and what would happen in the event of ill health or later life care needs.

They will also be monitoring your investments on an ongoing basis - if you have a large pot of money then your decision how to invest it is unlikely to be 'once and done' - it is likely to need to be revisited as your situation changes (both up to retirement and through retirement) and also as market conditions change.

Royal London commissioned research recently which found that the average person who took financial advice was substantially better off in terms of their pension wealth and their non financial wealth compared with those who did not, even taking into account the costs of advice.

But you are quite right to ask searching questions of your adviser to make sure you are getting value for money.

15:57

What happens when we die?

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I have state pension of £6,760 per year and occupational pension of £2,400 per year aged 70.

Husband has state pension £6,720 per year £10,248 occ pension age 72. What happens when either of us dies ?

Michelle replies:

You both retired under the old State pension system i.e. before April 2016. There should be an adjustment to your State pension when either of you die.

The widow(er)'s pension from the occupational pension will depend on the scheme rules so check with the pensions administrator.

As a general point, if you start co-habiting in retirement or remarry, you should check to see if this affects the pension that is being paid by the scheme.

15:56

Saving into a pension when unable to work due to mental health

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My 30 year old son has never worked due to mental health problems and is unlikely to be employed in the future.

His only income is ESA and he lives with us, his parents. Could he pay into a pension and if so, what type would it be?

Kaya replies:

Firstly, as your son is eligible to receive ESA, he should automatically be eligible for class 1 National Insurance credits for the purpose of his future state pension entitlement.

These National Insurance credits will be added to his record in the same way as it would be if he was able to work. You can check your son's state pension forecast by contacting the Future Pension centre and requesting for a pension statement to be sent in the post.

The contact details for The Future Pension Centre can be found via the following link: https://www.gov.uk/future-pension-centre

It is possible to pay into a personal pension and contribute up to £3,600 gross per annum on your sons behalf. This is the non-earners limit that is still eligible for tax relief.

The maximum net amount that can be paid in would be £2,880 net and pension provider would automatically add the tax relief of £720, bringing it to £3,600 gross.

You will need to check the ongoing charges, fund selections and also the pension providers process for make either regular and/or ad hoc pension contributions.

If you require any further assistance, please contact The Pensions Advisory Service helpline on: 0800 011 3797.

15:56

State pension not equal to 'living wage'

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Why is the state pension not equal to the 'living wage' paid to minimum wage earners.

After all don’t pensioners have a Human Right to also live without fear of choosing between heating or food bills?

Jas replies:

The State Pension is based on the number of 'qualifying years' of National Insurance Contributions you have either paid or been credited with between age 16 and UK State Pension Age.

If you meet the eligible criteria, you may be eligible to receive as a top-up what is known as Pension Credit. More information on Pension Credit can be found at the following link: https://www.gov.uk/pension-credit.

So if your income is below a certain limit you may be able to claim Pension Credit.

15:52

I will have to live to 107 to get back all my pension pot money!

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Can you explain to me why with one small pension I have of £11,000 in the pot in total the estimated annual income from this is £277 a month.

The pension company haven't yet come back to me about my query that it'll take me 40 years to claim all of this pension pot - can you think of any possible explanation?

If I retire at 67 then am I expected to live until I'm 107 to get out all the money in the pot? How can that be right?

Michelle replies:

Here are a few guesses to the explanation.

I would check to see if the pension in payment escalates or that there are any provision for dependant's pension.

You may also want to check as to whether they have quoted the pension in today's money rather than the value allowing for inflation up to your 67th birthday.

15:50

I'm a retired man with no state pension - can I claim on my wife's contributions?

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I am a 71 year old male who receives no state pension due to insufficient NI contributions.

My spouse, who is 72 years old, receives a full state pension as well as superannuation income.

Would I be eligible to receive a state pension based on my wife's NI contributions? If so, would this be backdated - as I have been retired for over 6 years.

Steve replies:

In general, there is no reason why a man cannot claim a state pension based on his wife's record in the same way that a woman can claim a state pension based on her husband's record, provided that both come under the old (pre April 2016) state pension system.

Given that your wife has a full state pension record, I would expect that you would be able to claim a pension of around 60 per cent of the full rate based on her record.

Whilst you cannot backdate such a claim to when you reached pension age, you should inquire about backdating as far as possible. I would expect up to a year would be normal.

At This is Money we would be very interested to know how you get on with this.

Either we would like to celebrate with you if you are indeed able to get a pension and some backdating, or we would like to hear if you encounter any problems - would you mind letting us know how you get on please?

15:48

Can you explain my State pension forecast

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Can you tell me why in my state pension forecast of 2004 it lists an additional state pension of £23.90 on top of the basic state pension of £37.41 at the time, giving me a total weekly state pension of £61.31?

The estimated pension for 2030 from this 2004 forecast was basic state pension of £79.60 plus the additional state pension of £23.90 again, giving £103.50.

The latest state pension forecast I did says I'll get £164.35, the same as everyone else.

I'm happy everyone has been brought up to a certain level if that's what's happened but why am I not getting the additional state pension amount anymore?

Michelle replies:

Your State pension forecast will provide an estimate of your State pension in today's money based on your National Insurance contributions/credits today AND your expected State pension if you carry on paying or getting National Insurance credits up to your State pension age.

I think that the £164.35 per annum is the State pension that you are on target to receive if you carry on paying or getting National Insurance credits up to your State pension age.

15:44

SERPS

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I contracted out my SERPS to Royal London many years ago after advice from a financial adviser.

I am still contracted out and get statements from Royal London. I have been advised by a friend to no longer do this.

Would you offer any advise? I have been in full time employment under PAYE my working life. I'm 37.

Jas replies:

The Government allowed you to 'contract-out' of SERPS using a personal pension between 1988 and 2012.

Therefore if you still remained 'contracted-out' of SERPS using a personal pension in April 2012, the Government would have automatically 'contracted-in' back into SERPS on or after 6 April 2012. You should still receive annual statements from your provider.

So how I can I find out if these companies performance are equal to each other and generally against their market peers ??

Many thanks if you can provide some insight on performance as this is the biggest financial decision of my lifetime

Michelle replies:

You are right that choosing the right investments for your SIPP drawdown is a very big decision and it is important to take the time to get it right.

Your financial adviser should have explained to you the risks involved especially of taking income from your fund when the stock market has dropped.

It is possible to use tools on the web to compare the performance of different funds against the same benchmark. You are paying the financial adviser and will be paying the fund manager so I would ask them to compare the funds against the same benchmark.

Choosing the right type of fund as well as choosing the right fund manager is really important. The right type of fund will depend upon how much income you are taking, how often and whether you have the ability to stop your income temporarily.

You should also remember that you can change the investments at any point although you should check whether this will incur any charges by the adviser or the fund manger.

In summary, I would suggest that you go back to the financial adviser to provide more performance analysis to compare type of fund and the fund manager options.

15:41

How does 'salary sacrifice' affect my entitlement to other benefits and allowances?

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If you pay more via salary sacrifice into your pension (to get your salary at the top end of the basic rate tax band currently circa 45k) then are you still able to receive/apply for the following?

As discussed in my recent column here, 'salary sacrifice' is an arrangement whereby you agree to give up some of your salary and your employer puts extra money into a pension (or some other workplace benefit).

The advantage of this is that both you and the employer can end up paying less in National Insurance Contributions than if they had simply paid you the money as regular salary and then you had put the money into a pension yourself.

Your question picks up on this theme and asks about the potential knock-on effects of such an arrangement for certain other income-related benefits and allowances that you can claim.

The short answer is that in general the salary that is used for those benefits and allowances is the actual salary you are being paid (that is, after the salary sacrifice has taken place) rather than your original salary.

In some cases it is advantageous to have eligibility based on a reduced salary, especially for things like the 'high income child benefit charge'.

However, for people on a much lower income the advantages might be less clear cut.

For example, if salary sacrifice takes you below £10,000 a year then you might not qualify to be 'automatically enrolled' into a workplace pension whereas your original salary might have been above £10,000 a year which would have triggered automatic enrolment.

Whether or not salary sacrifice makes sense may therefore depend in part on your income level and on which other benefits and allowances are relevant in your particular situation.

I have two pensions one in payment and the other deferred until mid-2019. I am not working now.

When I add up the expected gross amount from both pensions I should receive around £48-£50k p/a.

I expect to pay normal tax on the amount after personal allowance etc but will I pay extra tax under LTA? Also my state pension isn’t payable for another 6 years and will this affect my LTA?

Jas replies:

The State Pension is excluded for the purposes of the Lifetime Allowance. In regard to your private pensions, if the one that is in payment was claimed after April 2006, the pension provider should have informed you how much the pension would have used up as a percentage of the Lifetime Allowance as a percentage those benefits have used up.

When you claim the private pension in 2019, the pension provider will ask you if you have any pensions already in payment and the percentage of the Lifetime Allowance that previous pension in payment has used up.

They will then test the value of your 'deferred' pension against any available Lifetime Allowance available. If by taking the deferred pension in 2019 you exceed the Lifetime Allowance, if you do not have any 'protections', you will be liable to an additional tax charge on the amount of your pension savings, that 'exceed' the Lifetime Allowance available.

15:35

Will I be able to claim off my husband's NI contributions?

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My husband is 69, drew his state pension before 2016.

I am 47 with 17 years credits for my state pension, I have not worked for several due to looking after my husband in ill health and have claimed no benefits.

When I reach state pension age will i be able to claim off his contributions?

Michelle replies:

Thank you for your question as the rules are quite complicated for couples where one partner claims under the old State Pension system and the other partner claims under the new State Pension system.

The rules that apply to the new State Pension system are that your pension is based on your contribution record only.

This means that you will not be able to claim based on your husband's National Insurance contributions.

However, you have mentioned that you are a full time carer for your husband.

You should check to see if you can register as a carer as this may mean that you are entitled to National Insurance credits towards your State Pension.

15:32

Paying into a Money Purchase Pension after receiving the Teachers Pension

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I worked full-time from April to August 2018 earning approximately £10,000 gross and paid a very small amount into the People's Pension.

I have now taken my deferred Teachers pension and two others but I am still paying into my personal Scottish Widows Pension.

How much can I pay into the Scottish Widows pension this financial year, is it a maximum of £4,000 or £10,000 or some other figure?

I had my 60th Birthday in October this year.

Kaya replies:

There has been some confusion regarding what pension income withdrawals trigger what is referred to as the Money Purchase Annual Allowance (MPAA).

The MPAA reduces what can be contributed into another money purchase pension scheme, such as the Peoples Pension down to £4,000 gross per annum.

As your Teachers Pension scheme is a defined benefit scheme, taking that pension income would not trigger the MPAA and so you still would retain your full annual allowance limit of 100% of earnings, or £40,000 gross, whichever is lower.

You mentioned that you have also accessed two other pensions. If these were classed as pension pots, also known as a defined contribution or money purchase pension schemes then it is possible that the MPAA has been triggered.

If you had accessed these pensions flexibly i.e. a full encashment (not under the small pot rules), or via a flexible retirement option such as income drawdown or taking the pension in a series of partial withdrawals then you would have triggered the MPAA and will be limited to pay up to £4,000 gross into your Peoples Pension scheme.

This includes any employer contributions paid on your behalf.

If the other two pensions were also defined benefit schemes like your Teachers Pension Scheme, or you had purchased two lifetime annuities for example, you will not have triggered the MPAA and you still have your full annual allowance.

This is currently £10,000 gross for this current tax year based on your earnings from April to August 2018.

15:31

What happens to your state pension when you divorce after retirement?

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I have a friend in her 70s who is going through a divorce.

She tells me she only receives around £70 per week State Pension. I imagine this is because she never paid her insurance contributions for the required number of years to get the full pension of around £125 which I get.

Is there any way she can get her pension topped up to the full rate?

I would appreciate some advice on this matter as she is going to be quite hard up when her divorce is finalised.

Steve replies:

The good news for your friend is that her state pension should increase significantly following divorce.

Under the old state pension system (which applies to your friend) a divorced woman can claim a state pension based on her ex-husband's record of National Insurance Contributions.

Assuming he has a relatively full record of contributions, she should get a full basic state pension of around £125 per week.

If your friend has a lawyer involved, it would be well worth making sure they are looking at any other pensions that the husband is receiving.

Depending on what sort of pension rights he has, it may be possible for her to get a share of some of those pensions as well.

If your friend ends up on an income below around £165 per week and has little in the way of money in the bank or savings, she may be able to claim Pension Credit which would top up her income and also bring her into entitlement to other benefits such as help with rent or council tax bills.

15:28

Reduction to my Civil Service pension

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I worked in the Civil Service (DWP fore runners) for just over 22 years from 1975 to 1997, most of that time I was contracted out.

I then worked via my own limited company and claimed NI credits until last year. I am now effectively retired.

The Civil service Pensions provider says my CS Pension, currently over £900 a month will only be reduced by £12 a YEAR when I claim the state pension in 4 years time. Is this correct as I was expecting a bigger reduction?

Michelle replies:

This is a good question as it sets out the interaction between a contracted-out workplace pension scheme and the State pension.

When you are in a contracted-out workplace pension scheme, what use to be the second tier State pension is provided by the scheme rather than the State. In lieu of this, you and your employer would have paid a lower rate of National Insurance contributions.

When you get your State Pension, you will find that a deduction is made to cover the period that you were contracted out in the Civil Service pension scheme. You can ask for a State Pension forecast to find out what this deduction will be.

I am confused about the £12 per annum deduction that myCSP has told you about and this may be for another reason so I would suggest you check.

15:25

Widow pension

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I 'got together' with my common-law partner after her husband had passed away.

He died in 2001 at the early age of 54, she has collected a London Pension Fund pension ever since.

As we have lived together for many years now, we would like to get married but of course the pension question comes up.

She is retired now, receives a widows pension and her own pension, I am still working.

If we were to marry would she lose her widows pension?

I have read several articles and it appears that re-marriage, does not affect the widows pension award, once she has retired/started to collect the widows pension, but we really want to do the research and tick all the boxes.

Jas replies:

Most public sector pension funds - such as the Local Government Pension Scheme, i.e. London Pension Fund Authority are subject to rules passed by the UK Parliament.

Where a person is awarded a widow/ers pension following the death of their spouse, this remains payable either up to the date that you live with another person (i.e. cohabit), or die if earlier.

As you have got together with your common-law partner, I would suggest that you contact the scheme administrator as soon as to prevent any possible overpayment, or other consequences.

15:23

GMP equalisation

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My IFA has requested a pension transfer quotation from my pension manager and been told the scheme can't provide a new CETV (cash equivalent transfer value) until a court ruling about GMP equalisation is finalised, as they don't know how this will affect my benefits. Therefore CETV requests are on hold.

They couldn’t give a date when it will be resolved.

Do you have any idea what this is all about and when the count ruling might be expected?

While I wait for this I can't access my pension and I’m having to live off savings. I'm sure I’m not the only person being affected by this delay.

When I first requested a transfer quotation on 4 June, I was told they couldn’t provide one because of legislation introduced on 6 April.

This legislation requires them to provide additional information to members with 'safeguarded flexible benefits'.

They said they were unclear whether a GMP should be considered a 'safeguarded flexible benefit' and were seeking legal advice. Is this related? I received the quotation on 17 July but it has since expired.

Steve replies:

The delay you are experiencing relates to a recent court case involving the Lloyds Bank pension scheme.

Part of a company pension is known as a 'Guaranteed Minimum Pension' or GMP and this is the amount that the scheme promises to the government that it will pay to the member in retirement.

The court case arose from the fact that GMPs were different between men and women.

The court ruled that this was unacceptable under equalities legislation and so schemes are now wrestling with how to implement this ruling.

Some are waiting until the deadline for an appeal against the ruling has passed later this month.

Some pension schemes are just delaying for a few weeks while they re-write their literature to take account of this new judgment and will then start again to re-issue transfer values.

Others are going ahead and treating any transfer value quoted to date as a 'partial' transfer, leaving open the option of making a small top-up payment if they have to adjust pension benefits in light of the court case.

A key point is that you have not lost your legal right to a transfer, and schemes cannot delay indefinitely.

However, as long as they are within the legal time limits for providing a transfer value then there is nothing that you can do to force them to give you a figure.

Once the deadline for an appeal has passed, later this month, and once schemes and their advisers have had a few weeks to digest the ruling, I would expect things to get moving again in most cases.

I have called on the Government and the regulators to tell schemes exactly what they should be doing in light of this judgment so that any interruption to the process is as short as possible.

Need for advice on a small transfer value from a Defined Benefit Scheme

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My 21 year old son started working on an apprentice scheme with a company that had a Defined Benefit pension.

After 18 months this was closed and he now contributes to a Defined contribution scheme with the same employer.

His DB pension will pay approx. £90/year at age 65, he got a transfer value for the DB scheme which was less than £5,000 and wanted to transfer it into his new DC scheme, the DC scheme (Legal and General) refused to do this without him paying for advice from a financial adviser – even though it was well below the £30,000 limit.

I felt that this was an unfair request – the fees would have been a high percentage of the fund value.

Why are pension companies allowed to insist on this when it goes against the pension freedom rules and puts an undue financial burden on a client?

Michelle replies:

As you rightly say, you are required under law to take financial advice if you want to transfer out of a defined benefit scheme and the transfer value is more than £30,000.

On top of this, a provider is within their rights to put their own terms & conditions on what transfer values they will accept.

Many providers are concerned that people may transfer out of a defined benefit scheme without fully realising the fact that they will be losing guarantees and that the decision is irrevocable.

Your two courses of action are (1) to plead your case with Legal & General to see if they will waive their terms & conditions or (2) transfer to a provide who will accept the small transfer value.

Whilst in this case, the benefit from the defined benefit scheme is small, it is important for people to think very seriously about transferring out of a defined benefit scheme regardless of the size of the transfer value.

15:11

Can I take all my pension pot and close my pension scheme?

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I am 55 and considering cashing and closing one of my private pensions (which is not a defined benefit pension) and I want to continue working full time as well.

The cash transfer value is about £20,000, I would like the advantage of taking £11,850 as quoted from PensionWise because there is no tax at this amount.

I don't want to transfer the remaining amount into another pension pot, I prefer to pay the tax and close the pension scheme.

The pension administrator is preparing the paperwork for me to read. They are using a commutation number to decide the amount.

Michelle replies:

As you rightly say, you can take benefits from your pension pot as you are aged 55. You can take 25 per cent of the pension pot of £20,000 as a tax free cash sum.

The remaining 75 per cent of the pot can be taken as cash but you pay tax at the income rate that applies if you add the 75 per cent amount to your other income. Having done this, you can then close your pension scheme down.

The £11,850 is this year's personal allowance so if the 75 per cent of your pension pot is £15,000, and you have no other income, £11,850 of the £15,000 will be tax free and you will pay basic rate tax on the balance.

You may find that your pension administrator will deduct tax at a higher amount and you will then have to claim back the tax through the HMRC form (possibly the P53Z or P50Z - check the giv.uk website to see which form applies to your circumstances.

I am confused by your reference to "commutation" as this usually applies to defined benefit schemes.

15:10

Why do I only get £128 in pension when newer pensioners get much more?

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I was born in 1948 and have always paid my National insurance correctly.

I worked for 43 years and my pension is £128 per week. People I know who were born after April 1950 are on £155 per week.

I find this totally unfair and do not understand why an opposition party have not taken this on board.

They would stand to win hundreds of thousands of votes if they pushed for the £155 to be paid to all pensioners. Surely the politicians know about this situation!

Steve replies:

When the state pension system was changed in April 2016, all of the old elements of the system - the basic pension, the state earnings-related pension (SERPS) etc - were replaced by a single flat-rate payment.

Under the old system many people got both a basic pension of around £125 per week plus a SERPS pension of (say) £40 per week giving them a total under the old rules of £165 per week.

Under the new system they might get a single flat rate pension of just under £165 per week, so for many people the *total* from the old basic plus SERPS pension is pretty similar to the new flat rate figure.

In your case, if you had a full working life but are only getting a state pension of £128 per week, I would guess that you were a member of a company pension scheme (or public sector scheme).

If so, this scheme was probably 'contracted out' of part of the state system.

Without going into too many details, this means that part of your state pension is being delivered by your occupational scheme which is why your state pension is relatively low.

If you had retired under the new state pension system a deduction would be made from the full flat rate figure of £164 per week for people in your situation.

As a result, even if you had retired after April 2016 you probably would only have got a pension at around your current level. For you, therefore, there is no 'cliff edge' between the old and new system.

There are some particular groups who get something of a 'windfall' from the switch to the new system.

This includes people who spent a long time as self-employed or carers who may not be entitled to much under the state earnings-related pension scheme.

But overall the cost of the new system is pretty similar to that of the old system - there is not a big 'give-away' to new pensioners. And in the longer term, today's younger workers will build up *smaller* state pensions on average than those who have recently retired.

15:07

Puzzled by State Pension

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State Pension - how does it work? Many people, like me are coming up for retirement. I am 60.

I had 32 years NI on the old system, but even if I pay for the next five years, so 37 in total , I cannot get a full pension.

Jas replies:

Your State Pension is based on the number of 'qualifying years' of National Insurance Contributions (NICs) that you have either paid or being credited with between age 16 and State Pension Age (SPA).

You can get a State Pension forecast/estimate using the following link;https://www.gov.uk/check-state-pension

It may be possible if you have 'gaps' for you to consider paying voluntary Class 3 National Insurance Contributions as well.

You can contact The Pension Service on 0800 731 0175 and arrange for an appointment with an National Insurance contribution specialist to discuss your options.

15:05

Increasing pension contributions into a SIPP and investment options

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I am 37 and currently investing into a HL Sipp pension scheme provided by my company.

After meeting the HL pensions adviser, I have recently decided to increase my pension contributions from four per cent to 25 per cent which will take effect from December 2018.

I have been looking at funds to invest into, however with the number of funds available making a decision is not easy!

Would you be able to advise how i should split my holding?

Kaya replies:

As you have experienced in your research so far, pension providers will have a vast number of different fund choices for your regular pension contributions.

You should pay close attention to the ongoing charges associated with the funds, as this could of course have a impact on the investment growth over time.

You will need to consider your attitude to risk at this time at the age of 37, which may of course need to be adjusted as you get closer to your target retirement age.

You mentioned about how to split a pension fund across different investments. This will depend on how much you wish to diversify your pension investments and the charging structures available.

You could speak to your pension adviser to whether there are options available for a more active investment management approach to your SIPP and the associated charges.

You could also request different illustrations to estimate how much your fund could grow depending on the fund growth assumptions, charges and inflation assumptions.

You may wish to also seek some financial advice to help you make a decision.

Here is a list of financial advisers that you can search for in your local area using your postcode: https://directory.moneyadviceservice.org.uk/en

15:02

Will my grandchildren get NI credits if they are still in education?

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I query this as a concerned grandparent.

I have three grandchildren and the eldest, who was born in September 2001, has undertaken to stay at school for sixth form education.

Will he automatically receive NI credits or will he have to apply for them?

Should he have needed to applied for them can he still claim since Sept, 2017 when he turned 16?

Michelle replies:

This is a really good question as you need to have paid National Insurance or received credits for 35 years to get the full State pension under the current rules.

The good news is that your grandchildren still have plenty of working years to reach the 35 years even if they remain in education up to age 30.

They will not get National Insurance credits whilst in education.

15:00

Ex-wife wants splice of my lump sum

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I am soon to retire from the police service with 30 years service. I will receive full pension and a lump sum of around £13,000.

I divorced 17 years into my 30 year service and froze out my ex-wife removing her from being the named person in the event of my death.

I settled many years ago giving my ex-wife the house and in return she paid me £30,000 she still owes me £5,000.

She sold the house at a great profit and quite right kept the money made on the sale not paying me my £5,000.

This week she asked me to attend mediation thought it was about children all over 17 years of age but it was to make a claim against my lump sum. Any advice.

Jas replies:

Your financial settlement on divorce would have been agreed by the Courts.

You should seek legal advice from a solicitor or barrister that specialises in family law to find out what your options are.

14:54

Does working part-time and paying less National Insurance reduce my state pension?

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I recently went part-time after maternity leave, I now work 16 hours per week, I do pay National Insurance they take around £5 per month out of my salary.

Previous to going part-time, I have always worked full-time and paid NI.

My question is, paying a smaller amount of NI while doing part-time hours does this affect my state pension later on, will I still be entitled to a full state pension when I retire?

Steve replies:

Under the old state pension system (which applied to those who reached pension age before 6 April 2016) you would indeed have got a lower state pension if you had lower earnings.

This was because there was an earnings-related element to the state pension (known as SERPS) which meant you got a bigger pension the more you earned.

The good news is that under the new state pension system this is no longer a problem. As long as you are paying (or being credited with) NI Contributions for a whole year then this counts as a full 'qualifying year', regardless of your earnings level.

This means that whether you are a carer at home with a young child, a part-time worker on a modest wage or the chief executive of a big company, you get exactly the same amount of state pension for a year in the system.

Incidentally, assuming that you are now getting child benefit (for a child under 12), you are also entitled to credits towards your state pension record, so even if you stopped work altogether your state pension record would be protected.

As an aside, if you have a parent or in-law helping look after your child while you are out at work, you could even sign over your NI credits from your child benefit to the family member helping out, and that would help to protect their pension as well.

I am 47. I have seven children. The youngest child is nine so I have always had child under the age of 12 at home

Over the years, I have worked on and off part-time as a supply teacher earning less than the tax threshold

I read an article that you wrote in 2016 which indicated that a mother who was taking care of her children could have a pension boosted if I paid a one off lump sum of £730

Would this apply to me because I have done some part-time work? If it could apply to me how would I go about finding out and making this payment?

I vaguely remember a few years ago I got a notification from the government telling me that my pension would be around £100 per week

If you have any advice for me I appreciate it

Jas replies:

If you are claiming Child Benefit then you should receive 'National Insurance Credits' on your National Insurance Record, up until the last child is aged 12, up to a maximum of 22 years of National Insurance Credits.

If you still have 'gaps' in your National Insurance Record, you can they pay voluntary Class 3 National Insurance Contributions. In 2016 a 'qualifying year' would have cost approx £730.

You can get a State Pension forecast/estimate using the following link: https://www.gov.uk/check-state-pension

14:51

Only taking the tax-free cash sum

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When I reach 55 in two years time, my DC Pension will be worth £600,000.

Can I take £150,000 tax-free, leave the remaining in the scheme, but also continue working and paying in the maximum £40,000 each year through the company scheme I am in through my employer and in my SIPP? For another five years until I retire at 60.

Michelle replies:

Yes it is possible to take your tax-free cash sum of £150,000 but not start taking your income.

This is called the flexi access drawdown. Your annual allowance continues at £40,000 per annum (subject to the level of your income i.e. tapered annual allowance does not apply).

If you take £150,000 as part of your tax-free cash sum and an income, this is called UFPLS. In this case, the annual allowance drops to £4,000 per annum.

14:45

Married couple and lifetime allowance

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A married couple can currently transfer assets between themselves without a tax liability.

While there are allowances to pass assets to family and third parties, generally tax is collected when the 'couples assets' pass to the next generation.

Income allowances can also be 'shared' to some degree also.

Traditionally (and is often recognised in Money Mail) pension provisions for females are generally less robust than their male partner due to time away from work whilst caring for their family.

This can mean that due to the current LTA rules, when in retirement the couple can be penalised because the spouse's pension exceeds the LTA but the wife has substantial headroom.

If the government are to encourage 'family' values and fairness/consistency in taxation, why can pensions not be transferred to utilise headroom in a spouses pension LTA?

The bizarre fact is that on divorce this is allowed therefore a couple could technically divorce then remarry to achieve a sharing of allowances.

Do you forsee a change in legislation at some time in the future?

Michelle replies:

There are currently no plans that I am aware of to allow couples to share their lifetime allowances.

Your question reminds me that it is important for married couples to make sure that both invest in pensions, where they can, so that you use both lifetime allowances.

It is also important so that both have income in retirement so that you use both personal allowance.

Sorry, this is not the answer that you are looking for.

14:42

If people transfer out of our company pension, what happens to those who are left?

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My company has transferred its closed Defined Benefit scheme to an insurance/pensions company.

If too many of my colleagues transfer out, will the scheme go bust, even though my company still operates, and if so would the pension rescue scheme step in?

Steve replies:

The first thing to say is that the two regulators who oversee pensions - the Financial Conduct Authority and the Pensions Regulator - both say that you should start from the assumption that staying in your final salary pension is the best thing to do.

While there may be individual circumstances where a transfer out is right, for most people a guaranteed income that lasts as long as they do, which rises in line with inflation and which isn't affected by the ups and downs of the stock market is a good thing to have.

When people want to transfer out, the pension scheme has to offer them a transfer value.

When setting this value, the pension scheme is meant to think about not only the person transferring out but also the people left behind.

If the pension scheme is poorly funded then the trustees can make a reduction in the transfer value being offered to those who leave the scheme.

Not many schemes have been doing this, but recently the Pensions Regulator wrote to a couple of dozen schemes reminding them of the importance of being fair to those who are left behind.

For as long as your company is trading it has a legal duty to support the pension scheme and to have a plan in place to make sure that pensions will be paid.

Even if a lot of people transfer out, the company still has a legal responsibility to those who are left behind.

The pension rescue scheme that you mention (known as the Pension Protection Fund or PPF) would usually only come into play if the employer became insolvent.

If they are trying to get you to transfer out it may be that your scheme will offer to pay towards the costs of financial advice and an adviser will be able to help you work out if it is right for you individually to transfer based on your personal circumstances.

14:39

Claiming the death benefit from my ex-husband's pension

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I am wondering if I can claim some of my ex husbands private pension.

He had a pension which he arranged through the TSB Bank. Some years later we were divorced, then he later died, before he was pension age.

My question is, could I claim the pension or could any of our children have a claim. If so, how do I go about it?

Michelle answers:

Was the pension taken into account in the financial settlement at your divorce? It is now a requirement to take into account pensions in divorce.

The result is that your share of his pension may be transferred to your pension pot - it does not sound as if this happened in your case. It may be that you received some other asset in lieu of your share of his pension pot.

Your ex husband died before drawing his pension. The pension pot value is usually paid out as a death benefit.

The trustees of the pension will decide on whom are the appropriate beneficiaries. They will take into account any expression of wishes that your ex-husband may have left with the trustees.

You can make representation to the Trustees setting out why you and/or your children should be beneficiaries.

The Trustees will consider this along with any other facts. It is solely at the discretion of the trustees to whom the death benefit is paid.

14:37

Qualifying earnings thresholds for automatic enrolment

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I have been looking into the cost of the increase into the April 2019 workplace pension increase and discovered that companies only have to pay from £6,000 - £40,000 with the choice to pay on all your salary.

So, after looking into my wife's wage slips, I see her second job - even though she pays tax on the whole amount - still comes under the same rules so she is losing out on another £6,000.

IE, she is getting paid £10,800 on second job and only £4,000 of that is what her pension is getting based on your thoughts.

Kaya replies:

Under the automatic enrolment legislation for workplace pensions, an employer can decide which definition of pensionable earnings to use for the purpose of calculating pension contributions.

The thresholds that you have mentioned are based on what is referred to as qualifying earnings (between £6,032 gross and £46,350 gross for the 2018/19 tax year).

It is possible for an employer to adopt an alternative method to calculate the pension contributions, such as 100 per cent of basic salary, but this is at the employers discretion.

If both employers that your wife is currently working for use the qualifying earnings method, your wife can request to increase her own pension contribution amounts if she wishes to.

I appreciate that she would not benefit from increased employer contributions, but she would qualify for tax relief on 100 per cent of her earnings (inclusive of the 20 per cent basic rate tax relief), up to the annual allowance limit of £40,000 gross per annum.

14:35

GMP

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I have a Guaranteed Minimum Pension (GMP) from Heineken that I accumulated through the company opting out of SERPs in the 1990s.

If I take this GMP Pension at 65 years old will it count towards my Lifetime Time Allowance or is it exempt from LTA?

Jas replies:

GMP has to be paid to you in the form of an income, and therefore it will count towards your Lifetime Allowance (LTA)

14:31

Divorce

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I divorced in 2007 and a quarter of my pension was allocated to my ex-wife.

She took no action and now wants the quarter share paid as cash. I am prepared to do this from non-pension funds providing the pension sharing order is rescinded. Is this possible?

Jas replies:

The issue you have here is that on divorce both of you would have agreed how your 'shareable assets' on divorce are going to split between you and this would have been approved by the Court.

You would need to obtain legal advice to see if you have got any legal grounds to re-open the divorce proceedings, and the financial settlement reached, and also convince the Court that this was an option and that the Court would allow you to rescind a Pension Sharing Order first.

14:31

Lifetime Allowance

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My retirement date through voluntary redundancy is 31 March 2019 – my first pension payment will commence 15 April 2019.

Can you confirm what my Lifetime Allowance will be £1,030 or £1,054 (2018 -2019 or 2019 -2020) also will I have a full £40,000 pension allowance.

I am very close to the Lifetime Allowance.

Michelle replies:

You are right to pick up this point about which Lifetime Allowance applies if you are taking your pension in the March/April period when you are on the cusp between two different tax years.

The Lifetime Allowance that applies to you depends on when you receive the money.

In other words, if you gave the instruction on the 15 March 2019 which results in the lump sum being paid on the 6 April 2019, the Lifetime Allowance that applies is the 2019/2020 lifetime allowance (£1,054).

It is really important to be clear on the instructions that you give to the provider so that you make sure that you benefit from the higher lifetime allowance for the next tax year.

In your case, I am not sure if your first pension payment follows the payment of a lump sum.

I would suggest that you speak to the administrator of your pension scheme especially as you are close to the lifetime allowance limit.

14:29

I have reduced life expectancy after a kidney transplant - should I transfer out of my final salary pension?

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I have a Final Salary Pension with my former employer Bank of Ireland. I am 45 and the pension isn't due until I'm 60.

My question is in relation to the fact that I had a kidney transplant when I was 29 and, as such, while in good health at the moment my life expectancy isn’t likely to be much past 60 if I reach that age at all.

I am wondering if I would be better transfering the pension to a SIPP.

My main reasons being if I died before age 60 I believe my wife and children would be able to benefit from the funds more than I would.

Also, should I want to at 57, I could use the money early to purchase an annuity at what would probably be very preferential rates due to my health.

Steve replies:

The first thing to do would be to talk to your former employer's pension scheme and find out what special rules they have for people who are in ill health.

Many company pension schemes have rules which allow you to take a pension earlier if you are in poor health and they may have particularly favourable rules for those who know that they are terminally ill.

This could include taking your pension benefits from the scheme as a lump sum which could then be passed on to your heirs.

You are right that transferring out would be an option, and you would be required to take financial advice before doing so.

Your adviser could look at the option of buying a regular income or an 'annuity' with your transferred sum.

This is very rarely the right thing to do on a pension transfer because a final salary pension already provides a guaranteed income for life and it would be unusual to give up a guaranteed income for life simply in order to buy an annuity.

But if you thought you could get a much higher income through the annuity route (by buying something called an 'impaired life' annuity) then it would be worth having a look at the sums.

More usual would be to invest the transferred pension so that if you were to die the full capital sum would be available to your wife and children.

You should be aware that in normal circumstances you cannot access your transferred pension until you are 55, though again your adviser can talk you through the options for doing this sooner if you are in poor health at that point.

14:23

AVC pension

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I have more than £20,000 in an AVC pension.

I would like to transfer this to another fund etc - any information on best investments.

Jas replies:

The Government introduced pension flexibilities in 2015, but the options are discretionary on providers.

The first thing you should try and do is to contact your scheme administrator and ask for a 'retirement quotation' to see what options they offer.

You should also find out if there any exit penalties/charges to transfer from your existing provider.

On best investments that depends on your own attitude to risk, as different providers will have different funds available, each of which will have a 'risk rating'.

In regard to the pension product you move funds to, you should ask the potential new provider for a 'key features' document which should detail the charges, and the funds available.

You could also ask for a fund performance factsheet to see how the funds you were wishing to transfer to have performed.

More information on the options available on the pension 'flexible' options can be found at the following link;https://www.pensionwise.gov.uk/en/pension-pot-options

14:23

Charges on my pension

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I have a pension which a few years ago was changed to an Openwork scheme.

My annual charges are a little higher but it's a fully managed portfolio.

My gripe though is the charges on a lump sum contribution, which I have put in a few times. I'm having to pay 3.5 per cent on them.

I do question my adviser each time but he tells me the checks are for money laundering and associated work, also reminding me a get to buy shares at a better rate than other schemes.

Does the 3.5 per cent seem reasonable to you?

Michelle replies:

This is a really good question as it is important to know how much you are paying in charges and what you are getting for your money.

As you have done, you should ask the adviser to explain what they are doing for their fees.

It is difficult to say whether 3.5 per cent is reasonable as it will depend on the size of your pension contribution, any other charges that are being levied by the adviser and the service that the adviser is providing.

It appears that you are making regular pension contributions so it may be worth having a chat with the adviser to see if the regular submission of contribution is streamlining the process so that the adviser is not having to do so much work.

14:21

Investment decisions within an income drawdown product

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I am just retired and sorting out my work pension. I am taking flexible drawdown but need to sort out investments.

I am not sure what to invest in and whether to invest all my money in one pot or choose several different ones. Any help would appreciated.

Kaya replies:

Most pension providers will have a number of available pension funds for their customers to invest in via their income drawdown products.

The most important factors to consider for investment selection are the ongoing charges and whether the associated risk category is appropriate to your long term strategy.

You should check the key facts documents for the available funds and also do a comparison of different income drawdown products.

The Money Advice Service has a useful comparison tool for income here: https://www.moneyadviceservice.org.uk/en/retirement-income-options/income-drawdown

Your income withdrawal strategy over time via a flexi-access drawdown product is just as important as the investment decisions.

For example if you set a regular income amount over a long period of time and did not alter this during times when the underlying funds were underperforming, then you could quickly erode the drawdown fund over a short period of time.

14:19

Should I put money into my pension or pay off mortgage?

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I am a 54 year-old woman and employed by the NHS as a Therapy Technician Band 3

I have been in this employment for 26 years full-time in the same position, earning approximate amount of £19,850 yearly currently.

I have five years left on my mortgage. I have a small amount of extra funds each month

Would I benefit form putting extra funds to my pension funds in some way or paying the monies to pay my mortgage early?

My NHS pension is my only form of income, apart from the state pension.

Once I retire I will have worked full time for thirty one years. I foresee myself working full-time as long as I am able in my current employment.

Should I invest the small extra funds I have into some other investment? I am concerned that I will not have enough funds in my NHS Pension.

Steve replies:

The good news is that with a full state pension of around £8,500 per year plus an NHS pension based on over thirty years of service you should get a total income in retirement that is not far short of what you have been used to during your working life.

If you have extra money to spare then you have a number of pension options. You may be able to buy 'extra years' of service in the NHS scheme, or you could pay 'additional voluntary contributions' (AVCs) which will build you a 'pot of money' pension.

You could do that within the NHS scheme or by investing directly in a personal pension, but the NHS AVC arrangement is likely to have relatively low charges.

Given that you appear to have secured a pretty good regular income from your state pension and the NHS pension you are likely to end up with, you might find that a 'pot of money' pension gives you some welcome flexibility in retirement if, for example, you want to make a lump sum purchase or pay off a debt.

You certainly could opt to pay off your mortgage a bit earlier, though if you have a mortgage with a low interest rate then you are not saving much money by paying it off sooner.

By contrast, money that you put into a pension will attract tax relief and can then be invested. Part of that pot can also be taken as a tax free lump sum.

In summary, you have worked hard and saved hard and seem to be well on the way to a secure regular income in retirement.

If you can save a bit more now then whilst paying off your mortgage early would save you some interest, you may get a better return and have more options with your finances if you now start to build up a small additional pension pot.

14:16

Provider says I must take financial advice

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Why does Royal London say I have to get advice from a financial adviser? I have to pay advice I do not need?

It's my money to do what I like - not to get ripped off by so called financial advisers who only care about there own bright ideas

Michelle replies:

There are 2 main reasons why you may have to take financial advice.

The first one are there are some regulatory requirements to take financial advice depending on the type of pension and the size of the pension pot. (We have covered the reasons in an earlier answer).

The second reason is that a provider may insist that you take financial advice as part of their terms and conditions.

Of course, you may choose to use a provider that does not insist that you take financial advice.

Financial advice does result in you having to pay a fee but taking your pension is a big decision.

Financial advisers may be able to provide added value so it is worth at least having a conversation with some financial advisers to find out what they can do to help you and how much they will charge.

14:11

State pension forecast

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Irecently requested a State Pension forecast and (in round figures) was given a figure of £175 per week.

There was also mention of a 'COPE' figure of £60 per week - does this mean I will only receive a State Pension of £ 115 per week or will I receive the full amount?

I have 45 years NI contributions and was contracted out with my company pension which I am now taking as drawdown.

Jas replies:

The Government will pay you £175 as your State Pension.

If you have a COPE means that you were 'contracted-out' of the State Additional Pension prior to April 2016, either through a personal pension or an employer's occupational pension scheme.

The personal pension provider or employer occupational pension scheme will pay the £60 COPE as part of the pension you receive from them. The COPE is not an additional amount.

14:10

Can I move pension pot into a limited company?

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I have a pension pot that I feel would be put to much better use if I could invest it in property.

Is there any way I could move the funds from this pension pot into a limited company and thereafter purchase a but to let via the company?

Michelle answers:

Firstly, you may only access your pension pot (in most cases) from age 55).

At age 55, you could take 25 per cent of the pot as a tax-free cash lump sum and use this to invest in property.

Alternatively, you could take the entire pot as a lump sum but you will be taxed on 75 per cent of it at the income tax rate applicable when the 75 per cent is added to your other income.

As I am sure that you are aware, you may pay higher stamp duty on buying property as an investment and will be subject to capital gains tax on selling the property.

Before making the investment, do check out the tax and fees that may apply.

It is possible to use your pension pot to invest in property. This is usually done through a self invested personal pension plan (SIPP).

You would need to find a SIPP provider who operates this type of SIPP. There are limits on the type of properties that you can invest in and it is usually not possible to invest in residential property.

If you go down this route it is important to check out the requirements and fees of the SIPP provider.

14:09

Can I pay National Insurance when I'm not earning?

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I have worked for about 8 years on PAYE but now I'm living on income from rented property only.

Can I pay National Insurance to increase my future state pension? I am 55 years old.

Steve replies:

Yes you can. Voluntary National Insurance Contributions (also known as Class 3 contributions) can be paid for years when you weren't otherwise making NI Contributions.

There is usually a time limit of six years for paying contributions. In general these are good value for money because the value of extra pension that you get is generally more than the cost of the extra contributions.

The main thing to bear in mind is that if you thought there was a chance that you might be on a low income in retirement and claiming means-tested benefits such as pension credit or housing benefit then you might want to think twice about spending money boosting your state pension.

This is because any pension income is taken into account when your means-tested benefits are worked out.

I retired December 2016 at 65 and despite full N.I contributions I have had a deduction of approx £30 a week.

I appreciate why this is done but I left the railway with a fund of approximately £20,000 and have since then built a personal pension fund by myself.

Surely the deductions should be based on the £20,000 and I don't think I can get £30 a week from that.

Is there a scale of charges, what are their deductions based on.

Thank you,

Kaya replies:

As you were previously contracted out of SERPS via the British Rail pension scheme, you are correct that the reduction of £30 per week from the full rate of new state pension will reflect this period of employment only.

When you were self employed, depending on the amount of taxable income you were in receipt of, you would have only been paying into the basic state pension element of the old basis.

Therefore you would have not had an opportunity to build up additional state pension during the 27 years whilst you were self employed.

The contracted out reduction to your state pension will be paid as part of the calculations of your British Rail pension instead, known as the GMP element.

This was the minimum income required to be paid from the workplace pension, rather than paying into SERPS at the time. Therefore that proportion is paid from the workplace pension scheme rather than the state.

I hope this helps.

14:04

Why the delay?

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1. I am 65 in July 2019, but my State Pension payments start only in May 2020. Why the delay, and will the payment be backdated to July 2019?

2. Do I need to notify anyone formally of my intention to retire in July 2019?

Jas replies:

The State Pension Age is now based on your gender and your date of birth. The State Pension Age is therefore no longer 65 for everyone.

You can check using the following link: https://www.gov.uk/state-pension-age.

The State Pension is not paid to people automatically, you will need to make a claim. You should get a letter about 4 months before you reach State Pension Age reminding you to make a claim.

You do not need to inform anyone formally that you want to retire in July 2019, but if you intend to have other sources of income apart from employment income, you should inform HM Revenue & Customs so that they can allocate any standard allowance you may have against your remaining income.

14:03

Must I take independent advice?

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I have a private pension do I need to have independent advice to take my money?

Michelle replies:

You may need to take independent advice depending on the type of private pension that you have.

For example, if your pension is a defined benefit (final salary scheme) you will need to take financial advice if the transfer value is over £30,000.

Another case when you must take advice is if you have a pension pot of more than £30,000 that has safeguarded benefits such as guaranteed annuity rates.

You may also find that a pension provider will only accept business if you have taken financial advice.

14:00

I have paid in 44 years of NI contributions - have I been robbed?

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Have I been victimised?

This year I discovered that I had 44 years of pension contributions paid.

I contacted the work and pensions department who told me that my pension comes under the old pension scheme.

Now people with 30 years are now getting more pension that me so am I being discriminated against because of my age.

I asked if I could have my money back or transfer 14 years of my contributions to my wife but was told that I couldn’t.

I would love an answer and an opinion about this as I am sure that I am not the only person in this situation.

Steve replies:

The number of years of National Insurance Contributions that you have to pay for a full state pension has changed several times in recent years.

Until 2010, men needed 44 years of contributions for a full basic pension and women needed 39 years.

From 2010-2016, just 30 years were needed for a full basic pension, but additional years still added to your pension through the state earnings-related pension scheme (SERPS).

For those reaching state pension age since 6th April 2016, 35 years of contributions are needed for the full pension, but this is the higher 'flat rate' pension of around £164 rather than the lower 'basic' pension of around £125.

It has always been the case that there is an element of 'redistribution' in the National Insurance system.

NI is not like a personal savings account where the amount you get out relates proportionately to the amount you put in.

This is partly because some people such as carers benefit from 'credits' into the system which means they may get more out than they are able to pay in, and this is financed by other people putting in more money than they get out.

13:51

Ask your pension question

Steve, Michelle and the team are ready to answer your questions, whether you've yet to get serious with your retirement planning, are soon to finish work or are already drawing a pension.